Chinese Premier Wen Jiabao, after a meeting here with British Prime Minister Gordon Brown on Monday, said that a lack of effective regulation had played a key role in unleashing the global financial crisis and its "disastrous consequences."

The Chinese premier's comments came two months before President Obama, Wen and other leaders of 20 of the world's largest economies meet in London to discuss a new system to monitor the global financial system.

Brown, who will host the meeting, has spearheaded calls for an international watchdog, saying, "You can't deal with the problems of global financial markets with national systems of regulation."

Regulation is an issue that arouses particularly strong feelings in London, which has grown into a leading financial center in recent years in part because of its reputation for light regulation.

Many in the City, as London's financial district is called, have cautioned against overloading banks, insurance companies and other financial institutions with new bureaucratic rules, saying it would strangle future growth.

But political leaders, citing the overwhelming public outcry over a crisis that has sent housing prices plummeting and unemployment skyrocketing, are pushing for greater government oversight over a financial industry that is widely seen as out of control.

Adair Turner, Britain's top financial regulator, said Monday that the "horrendous instability" in the markets because of the crisis has left "little appetite" for light regulation.

"People realize that the cost of having gotten the regulatory system wrong is hugely higher than if we had regulated more tightly in the first place," Turner, head of Britain's Financial Services Authority, said in an interview.

Turner has called for, among other things, requiring banks to build up substantial capital in good economic times that can be used in bad times. He has also called for stricter regulation of investment banks, hedge funds and other institutions in what he has called the "shadow" banking system.

But many say they are worried that the hedge funds, foreign banks and other financial institutions that moved to London in recent years -- as the city promoted itself as an easier and less bureaucratic place to do business than its rival New York -- will leave.

Eamonn Butler, director of the London-based Adam Smith Institute, said there is likely to be "overkill" when it comes to new regulation. That could "gum up financial markets," he said, and prove so costly that it drives all but the biggest players out, hurting competition.

"London benefited because it was lightly regulated," Butler said. Now, he said, "cities in the Far East are rubbing their hands" at the prospect of getting new business that relocates from London and New York as regulation tightens.

Brown, who has emerged as a global leader for his response to the economic crisis, continues to be hammered for it at home.

George Osborne, the opposition Conservative Party's chief spokesman on economic issues, blamed him for botching regulation during his decade as Britain's Chancellor of the Exchequer, or finance minister, before he took over as prime minister in 2007.

In a speech Monday, Osborne said that Britain's financial system had been "broken" by Brown, including his decision to remove regulatory functions from the Bank of England.

Lax regulation, Osborne said, allowed banks and other institutions to increase their debt to many times what they could afford. The government was forced to take over the ailing Northern Rock bank last year and now has a 70 percent stake in the Royal Bank of Scotland, which had been in danger of collapse.

In a news conference after his meeting with Wen, Brown again sought to trumpet Britain's response to the crisis. He said he intended to double British exports to China next year and warned of the dangers of countries turning inward during this crisis.

Even as he spoke Monday, hundreds of British power plant workers went on strike as part of a growing labor action to protest the use of foreign workers.

"Premier Wen and I agreed that the biggest danger the world faces is the retreat into protectionism, which is the road to ruin," Brown said. "The best attack on protectionism is to demonstrate today the benefits of trade for jobs, for businesses and for eventual prosperity."

Brown said the extension of trade between Britain and China "is a signal to the whole of the world that we will work together, cooperating, so that we can come through the world downturn."

Wen blamed ineffective market regulation, excessive borrowing and overspending in the West for the global downturn. He also said that as leaders focus on reshaping the world financial system, more priority should be given to helping poorer nations.

"There is light at the end of the tunnel," Wen said. "I am calling for confidence, cooperation and responsibility. This financial crisis is a global one. No single country can remain immune. We are sitting in the same boat, and we need to all work together to overcome the difficulties."

Not everyone welcomed Wen's thoughts. At an appearance at Cambridge University, a protester threw a shoe at the Chinese leader, exactly the same treatment then-President George W. Bush received at a recent appearance in Iraq.